Abstract

Standard setters and most academics maintain that accounting standards ought to rest on a set of guiding principles stated explicitly in a “conceptual framework.” The FASB and IASB are currently involved in a project to refine conceptual framework documents developed earlier. At this point, it is not clear what their final product will look like; its defining characteristics as well as the substantive content can only be surmised. This paper addresses the issues that FASB and IASB face, including the question of what a conceptual framework should be all about. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that meets our criteria. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach.

Bloomfield, Robert J. and Christensen, Theodore E. and Jamal, Karim and Moehrle, Stephen R. and Ohlson, James A. and Penman, Stephen H. and Previts, Gary J. and Stober, Thomas L. and Sunder, Shyam and Watts, Ross L. and Colson, Robert H., A Framework for Financial Reporting Standards: Issues and a Suggested Model (July 30, 2009). Accounting Horizons, Vol. 24, No. 3, 2010; University of Alberta School of Business Research Paper No. 2013-678. Available at SSRN: https://ssrn.com/abstract=1441338 or http://dx.doi.org/10.2139/ssrn.1441338

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